Cincinnati Bell (CBB) Lags Q4 Earnings and Revenue Estimate

Cincinnati Bell Inc. CBB is a leading regional diversified telecommunications and technology service provider to both residential and business customers. The company operates through three segments: Wireline, IT Services & Hardware and Wireless.

We are impressed with Cincinnati Bell’s continuous efforts to transform itself from a legacy copper-based telecommunications company to an IT company with contemporary fiber assets offering flexible data, video, voice and IP solutions to both consumer and business customers. In the Entertainment and Communications business, the company’s investments in Fioptics products have helped it to witness revenue growth and subscriber addition.

On the flip side, continuous erosion in local access lines, heavy capital expenditure requirements, legal hurdles and a weakening cash and liquidity position of the company are potent headwinds. Moreover, intensifying competition in the company’s operational region can prove to be a drag on its pricing power, thereby inducing pressure on margins.

Earnings: Cincinnati Bell missed Q4 2016 earnings. Our consensus estimate called for adjusted earnings per share (EPS) of 3 cents while the company reported adjusted EPS was 1 cent. Investors should note that these figures take out stock option expenses.

Revenue: Cincinnati Bell reported total revenue of $285.3 million lagging our estimate by around $20 million.

Key States to Note: At the end of 2016, Cincinnati Bell had 0.2013 million residential voice lines, down 7.6% year over year and 0.3224 million business voice lines, up 5.7% year over year. Long distance lines were 0.3173 million, down 6.6%. DSL Internet subscribers were 0.1056 million, down 21%. Fioptics Internet customers were 0.1976 million, up 28.6%. Fioptics video subscribers were 0.1376 million, up 20.3% year over year.

Check back later for our full write up on this Cincinnati Bell earnings report later!

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